Conservative Policies, Economics Hard On Families

And by conservative, I mean with a small 'c', and I mean that strain of American political thought that favors the wealthy and large accumulations of profit over ordinary citizens and their well-being, regardless of party. Anyone who'd help a large corporation and worry about whether or not helping the unemployed creates a moral hazard, or would be ridiculous enough to compare the federal budget to a household budget to encourage social spending austerity, or who'd brag about running US currency rates as if this were a developing nation, I mean them.

The fortunes and health of American families have been burned in the sacrificial fire of their free market ideology and they're busy even now adding more wood to the blaze.

If I sound upset about that, it's because I am. Don Peck wrote a thoughtful article in the Atlantic about how an era of joblessness will change America, and probably damage the future career prospects of the new job-seekers coming of age right now. He lays out the worst of the news about how big a problem this is:

... The economy now sits in a hole more than 10 million jobs deep—that’s the number required to get back to 5 percent unemployment, the rate we had before the recession started, and one that’s been more or less typical for a generation. And because the population is growing and new people are continually coming onto the job market, we need to produce roughly 1.5 million new jobs a year—about 125,000 a month—just to keep from sinking deeper.

Even if the economy were to immediately begin producing 600,000 jobs a month—more than double the pace of the mid-to-late 1990s, when job growth was strong—it would take roughly two years to dig ourselves out of the hole we’re in. The economy could add jobs that fast, or even faster—job growth is theoretically limited only by labor supply, and a lot more labor is sitting idle today than usual. But the U.S. hasn’t seen that pace of sustained employment growth in more than 30 years. And given the particulars of this recession, matching idle workers with new jobs—even once economic growth picks up—seems likely to be a particularly slow and challenging process.

The construction and finance industries, bloated by a decade-long housing bubble, are unlikely to regain their former share of the economy, and as a result many out-of-work finance professionals and construction workers won’t be able to simply pick up where they left off when growth returns—they’ll need to retrain and find new careers. (For different reasons, the same might be said of many media professionals and auto workers.) And even within industries that are likely to bounce back smartly, temporary layoffs have generally given way to the permanent elimination of jobs, the result of workplace restructuring. Manufacturing jobs have of course been moving overseas for decades, and still are; but recently, the outsourcing of much white-collar work has become possible. Companies that have cut domestic payrolls to the bone in this recession may choose to rebuild them in Shanghai, Guangzhou, or Bangalore, accelerating off-shoring decisions that otherwise might have occurred over many years.

New jobs will come open in the U.S. But many will have different skill requirements than the old ones. “In a sense,” says Gary Burtless, a labor economist at the Brookings Institution, “every time someone’s laid off now, they need to start all over. They don’t even know what industry they’ll be in next.” And as a spell of unemployment lengthens, skills erode and behavior tends to change, leaving some people unqualified even for work they once did well. ...

When the president now expects 95,000 new jobs a month then, it means a 30,000 job per month deficit from where we should be to keep up with new job seekers entering the market.

Peck goes on to discuss how the first job a person gets out of graduation typecasts your lifetime earning potential, making it very hard to catch up with people who are similarly skilled but landed higher paying jobs. Job seekers who come of age during deep recessions often find themselves in that same boat with all but a lucky few of their generational cohort, and are often prone to depression and heavier alcohol use over their lifetimes, even if they eventually find steady work again. Those who were already in the workforce face increased mortality risks for the rest of their lives following layoffs, and often have to deal with shame and social isolation.

The effects on these workers' families is often devastating, as well. Young people may delay or forgo marriage, divorce rates rise, domestic violence rises, out-of-wedlock births increase. Children growing up in money-stressed homes may have developmental delays due to resulting emotional stress or poor nutrition.

For families hoping their prospective college graduates can escape the trap, Sarah Burris notes, along with challenging some of Peck's misconceptions regarding young people, that the average college graduate is $23,000 in debt when they leave school. In this economy, they'd be lucky to make that much per year at their first job.

Poverty from unemployment is terribly hard on family relationships and the character of communities. As problems once regarded as unique properties of minority communities living in economically abandoned inner cities spread, it's going to be increasingly hard to deny that a lack of jobs can and will destroy the spirit of any community, one economically broken family at a time.

Worse, it isn't just this recession, starting in 2008, when the deregulated financial market came crashing down around all of us. Or started crashing, anyway, there's probably more to come. Peck notes that many households have already been facing stagnant or declining incomes for 11 years now. The pain of this downturn is getting added to family budgets that already lacked cushioning.

Adding the lack of a solid, universal health care system, life is going to be downright grim for many Americans. Consider that in the UK, where they do have such a system, a review of life outcomes by class done for the National Health Service demonstrated that poverty still decreases lifespans and increases illness:

... People in the poorest neighbourhoods are likely to die seven years earlier than people in the richest areas - and a greater portion of those shorter lives will be spent unwell.

The report estimates up to 202,000 early deaths could be avoided, if everyone in the population enjoyed the same health as university graduates.

Doing nothing to tackle these inequalities would cost the economy more, according to the review, which says inequality in illness accounts for £33bn of lost productivity every year.

... The report says a minimum income should allow people to consume a healthy diet, take exercise and have technology such as broadband, that enables them to maintain social networks. ...

It's the poverty that's making these Britons sicker, even when their country doesn't deny them medical care for the illnesses they do get. For Americans in poverty who are going without dental care, maintenance care for chronic conditions such as diabetes and asthma, pain treatment or counseling, they'll be facing an unfriendly job market in poor health and likely in frequent discomfort.

If you've ever had any kind of chronic health condition, you know what I mean when I say that there's no aspect of your life, confidence or performance it doesn't touch. People may be able to push through it, to achieve in spite of it, to be pleasant company anyway, but it's a job unto itself. These things each take their toll.

Adding a final insult to injury, Peck pointed out that inequality wasn't decreasing in this recession, but growing. In a piece by Corey Pein about inequality and economic development, economist Samuel Bowles explains that, far from being a necessary side effect of economic progress, inequality makes economies less efficient and productive (via Avedon Carol) than they otherwise would be, for the following reason:

... In short, in a very unequal society, the people at the top have to spend a lot of time and energy keeping the lower classes obedient and productive.

Inequality leads to an excess of what Bowles calls “guard labor.” In a 2007 paper on the subject, he and co-author Arjun Jayadev, an assistant professor at the University of Massachusetts, make an astonishing claim: Roughly 1 in 4 Americans is employed to keep fellow citizens in line and protect private wealth from would-be Robin Hoods.

The job descriptions of guard labor range from “imposing work discipline”—think of the corporate IT spies who keep desk jockeys from slacking off online—to enforcing laws, like the officers in the Santa Fe Police Department paddy wagon parked outside of Walmart.

The greater the inequalities in a society, the more guard labor it requires, Bowles finds. This holds true among US states, with relatively unequal states like New Mexico employing a greater share of guard labor than relatively egalitarian states like Wisconsin. ...

Pein notes that the US has an inequality coefficient more like a developing nation than its industrialized counterparts and sums up Bowles' conclusions this way, "The US and New Mexico will keep falling behind until they learn to share the wealth."

I guess that'll be a while, then. The US can't even close its broadband gap.

Ian Welsh has a partial list of what needs to be fixed to get the US back on track again. I recommend that you go read it, but in short, it's a list of our many broken and unaccountable institutions. He expects it will take a generation or two to fix it all, if it can be fixed, and that sounds about right. Not that it's any consolation for the families of the generation coming of age now.

It's particularly bitter to note that as the ravages of this economy take their toll on people who have to work for a living, the biggest worry of politicians, including President Obama is that they avoid hurting the feelings of extremely wealthy business leaders. One class of people can suffer poverty, depression, the loss of close social ties, higher risks of death, lifetime wage cuts, etc., and it's all right so long as a 'better' class of people doesn't have to be bothered about causing it.

If only everyone's families were worth as much as a CEO's ego.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future